Entity Comparison
Compare business structures for real estate investing and find the right fit.
| Feature | LLC | S-Corp |
|---|---|---|
| Formation | State filing | State + IRS election |
| Typical Cost | $50-500 | $200-1000 |
| Liability Protection | Limited | Limited |
| Taxation | Pass-through (default) or elect S/C-Corp | Pass-through with salary requirement |
| Complexity | Low | Medium |
| Best For | Most investors, rental properties | Active investors, flippers |
Detailed Breakdown
Best For
Most investors, rental properties
Pros
- Asset protection
- Flexible taxation
- Pass-through income
- Credibility
Cons
- State fees
- Operating agreement needed
- Some states have franchise tax
- Self-employment tax on active income
Annual Requirements
- • Annual report
- • Registered agent
- • Operating agreement maintenance
Best For
Active investors, flippers
Pros
- Save on self-employment tax
- Asset protection
- Credibility
- Easy ownership transfer
Cons
- Salary requirement
- More paperwork
- Restrictions on shareholders
- Payroll required
Annual Requirements
- • Annual report
- • Payroll taxes
- • Form 1120S
- • K-1s for shareholders
New Investor (1-2 properties)
Start with a single-member LLC for simplicity and protection.
Active Flipper
Consider S-Corp election to save on self-employment taxes.
Portfolio Investor (5+ properties)
Series LLC or separate LLCs per property for maximum protection.
Syndication Sponsor
LP structure with LLC as GP for investor protection.
Raising Capital
C-Corp for venture capital, LLC for private investors.
Multi-State Investor
Wyoming or Delaware LLC with foreign registration as needed.
This comparison is for educational purposes only. Entity selection has significant legal and tax implications. Always consult with a qualified attorney and CPA before forming any business entity for your real estate investments.